Zero Interest Rates Pressure Swiss Franc
USD/CHF strengthened to around 0.8187 on Monday (July 27th), reaching its highest level since June 2025. The currency pair extended its six-day winning streak.
The strengthening occurred after reports emerged that the Swiss National Bank could potentially keep interest rates at 0% until the end of 2027. The SNB subsequently declined to comment on the report.
Swiss inflation remains low and within the SNB's price stability target of 0% to 2%. Although oil prices have risen since the US-Iran conflict, the impact on Swiss inflation is considered more limited than in the United States.
Diverging monetary policy directions are also supporting USD/CHF. The SNB is expected to maintain low interest rates, while the market sees the Federal Reserve still likely to raise interest rates by the end of the year.
The Fed is expected to keep interest rates in the 3.50%–3.75% range on Wednesday. However, the market still rates a 33% chance of an immediate hike, while the probability of a September hike is around 81%.
The US Dollar Index has rebounded to around 101.47 after a brief dip to 101.12. As long as the US-Swiss interest rate differential remains wide and the SNB limits franc appreciation, USD/CHF still has a chance to maintain its uptrend. (arl)
Source: Newsmaker.id
